@maximilion11
How do flash loans work in DeFi?
Flash loans are uncollateralized loans that must be repaid within the same blockchain transaction.
How They Work:
A user borrows funds without collateral.
They execute multiple trades or actions (e.g., arbitrage).
If the loan isn’t repaid, the transaction is reversed.
Use Cases:
Arbitrage trading.
Debt refinancing.
Liquidation management.
Risks:
Flash Loan Attacks: Hackers manipulate market conditions to profit.
High Complexity: Requires technical knowledge and smart contract execution.
Flash loans offer powerful financial tools but are often exploited by hackers.
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